hours per r/o

[mainardguy]

back to the age old arguement of hours per r/o. Now I know that some of you are going to say that this number is irrevelent. maybe so, however, my question to you all is this number based on hours produced (cost of sales/avg tech wage) or hours sold? Is this number based on the number or hours costed per r/o or billed? I know that it can easily be manipulated if it is hours costed. I just want to know what the industry defination is. eg.
door rate= 110/hr
4 wheel alignment =$119.95
frt = 1.5
avg tech rate = 25/hr
we know that the elr will be $119.95/1.5=$79.95
but will the hrs per r/o be 1.5 or 1.09
thanks in advance

[btk]

the hours per ro is 1.09, it calculates off what is your stated door rate is.what your cost is doesnt really matter, what you collect from the customer divided by your door rate set up in the DMS. That is how I understand it and see it on my system

[robc]

Oh gosh, I am going to say the exact opposite. Like a ADP RAP report that shows Hours/RO is just the hours billed divided by number of ROs

[Backlash]

With you're example, the answer would be 1.5. Hours billed/collected divided by the number of ro's.

[btk]

I should clarify my answer-ADP RAP Report does not get reported to nada or the manufacturer. what is reported is the labor rate and total dollars(cp) or express lube generated divided by cp ros.=hours per ro.

[GENE WHITE]

MAINARDGUY - The flat rate hours to be used are the "engineered time allowances" (or the negoated time allowances at your dealership for a particular job) for the job and not the reverse engineered time. The effective labor rate is the result of the total dollars collected for the job divided by these engineered flat rate hours and not the opposite. By using this analogy, in your example the proper flat rate hours equalls 1.5. Many of the 20 groups have over the years used the 1.09 flat rate hours calculation which is in error.

Keep in mind that in the final accounting, the effective labor rate must be high enough to result in an overall retained gross profit on labor of at least 75% including helpers and lube techs.

As you increase your sales of maintenance type work and away from repair type work the tendency is for flat rate hours per repair order to drop unless your Service Advisory staff is selling all of the needed maintenances. This "walk around" upselling is what the quick lube businesses are selling and we have not been selling.

[mainardguy]

Thank you all for your input. Just heard back from my manufacturer and they define it as:
(customer labour sales divided by number of cp r/o's )divided by door rate = flat rate hours per r/o
So according to them it would work out to 1.5 hours per r/o.
There should be some common formula that all manufacturers should agree on!

[GENE WHITE]

The answer in your last posting is correct but the formila you gave will yeild 1.09. When you use dollars of labor sales divided by dollars (posted labor rate) you will not get the 1.5. You get a false flat rate hours per repair order. You must use actual flag hours divided by the number of repair orders to get the correct flat rate hours per repair order. Please reread my previous posting and work through an example. Good luck.

[mainardguy]

sorry Gene you are correct. I've got myself confused now!